The Van Lear mine is part of the Pontiki mining complex in Martin County.
The company said the slashed output was in response to ongoing challenges in the Central Appalachian coal market.
"Demand for coal delivered from Pontiki into the Norfolk Southern rail markets has declined significantly over the last 12 months and current customer indications are that this lack of demand could persist through 2010," Alliance CEO Joseph W. Craft III said.
"While we deeply regret the impact on our employees, their families and their communities, without firm sales commitments at acceptable prices, we must reduce production in this market environment."
As a result of the reduced operating level at Pontiki, coal production for the remainder of this year will be about 150,000 to 200,000 tons lower than previously anticipated.
Alliance said together with Kentucky’s Office of Employment and Training it would provide assistance to dislocated employees.
